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Metro Vancouver directors worry municipalities could lose significant tax dollars — while the federal and provincial governments rake the money in — under a scheme that allows large-scale medical marijuana producers to apply for farm-tax status even if they aren’t located in an agricultural area.

A new Health Canada law came into effect in April that regulates new commercial facilities that produce, process and distribute medical marijuana and prohibits production in residential homes.

B.C. Assessment has ruled that licensed commercial marijuana production, even if it is located in an industrial or commercial area and includes labs and offices, may qualify for the farm classification as “medicinal plant culture.” And once licensed by Health Canada, the farm class status can’t be denied, according to a Metro Vancouver report, and lands used as a licensed medical marijuana production facility are treated like any other farm in terms of assessment.

This means a medical marijuana producer operating out of a $2.1-million, 25,000 sq.ft. warehouse on a one-acre industrial property in Richmond, for example, would pay just $395 in annual taxes if they received farm-class status — 99 per cent less than the $33,100 a comparable business would have to shell out. The Agriculture Land Commission has also noted that marijuana is classified as a plant and therefore may be grown on farmland in the Agriculture Land Reserve.

“This is all about other orders of government making money,” Burnaby Mayor Derek Corrigan, chairman of Metro’s regional planning and agriculture committee, said Friday. “Imagine what would be paid to the federal and provincial government in taxes. The only ones not making any money are local municipalities that have to treat this as agricultural land. Why should municipalities subsidize the growing of marijuana?”

A Metro Vancouver report by planner Tom Pearce warns the potential property taxation implications could be significant for the region depending on how many medical marijuana producers apply for farm class status on properties currently billed as industrial or commercial. So far, Health Canada has licensed 13 medical marijuana producers across Canada, with six of those in B.C. — including one in Whistler and three in Metro. More applications are being assessed.

Richmond’s MediJean also has a license from Health Canada to grow medical marijuana for research and development, but not commercial, purposes, while Delta council this week gave conditional approval to an application by International Herbs Medical Marijuana Ltd. for an industrial-scale medical marijuana growing operation on Annacis Island.

Richmond Coun. Harold Steves said while MediJean pays regular taxes, the move could open the door to more exemption applications by producers of medical plants, such as St. John’s wort, who want to avoid hefty tax bills.

“It’s a pretty dangerous precedent we’re setting here,” he said. “If you raise horses, you don’t qualify for farm tax status but if you grow marijuana, you do.”

Ernie Daykin, mayor of Maple Ridge, said it’s no wonder people are concerned, noting municipalities have become “de facto regulators” of the new system. “It’s our police and firefighters that have to respond to the complaints,” he said. “We were told we can regulate it but we can’t prohibit it.”

Dharmesh Sisodraker, deputy assessor with B.C. Assessment for the Vancouver Sea-to-Sky region, said it is too early to say how many farm-class applications have been made, noting the new regulations just came into effect and medical marijuana operators have months to make an application.

“I don’t know if we maintain a log of properties that would apply to this,” he said.

Pearce suggests a municipality may have recourse to object to the farm-class status if the farm use is not consistent with the permitted uses in an industrial or commercial zone, but said independent legal advice should be sought to provide an opinion on the specifics of each zoning bylaw.

He also recommends further analysis and a legal review is required by municipalities that are seeking prohibitions within the ALR or across a whole municipality.

Corrigan said he expects to see a rising growth of highly profitable medical marijuana operations in the future, and warns they even could follow the winery trend and offer “tastings” of the product.

“We should be doing more to anticipate the problems. I don’t think it’s going to be like growing tomatoes, it’s going to be grown behind barbed wire fences,” Corrigan said. “This is big business and it’s all about industrial business and has little relation to agriculture. Most people growing marijuana to this point have been growing it in their basements, not in their back gardens. It’s fraught with issues and we should be saying we need to be more involved. If this is about bunkers with barbed-wire fencing, it should be in industrial, not agricultural, areas.”

The Union of B.C. Municipalities has also jumped into the fray, as concerns from smaller B.C. communities continue to mount over the issue, said Surrey Coun. Linda Hepner.

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Municipalities fret about lost dollars due to farm status for medical marijuana operations

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